6. Expected returns, dividends, and growth Aa Aa The constant growth valuation formula has dividends in the numerator. Dividends are divided by the difference between the required return and dividend growth rate as follows: D1 (rs -g) If you were analyzing the consumer goods industry, for which kind of company in the industry would the constant growth model work best? O Mature companies with relatively predictable earnings O Young companies with unpredictable earnings All companies Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.85 at the end of the year. Its dividend is expected to grow at a constant rate of 8.00% per year. If Walter's stock currently trades for $13.00 per share, what is the expected rate of return? 17.43% 22.23% 8.13% 9.28% Which of the following conditions must hold true for the constant growth valuation formula to be useful and give meaningful results? O The required rate of return, rs, must be greater than the long-run growth rate. O The company's growth rate needs to change as the company matures. The company's stock cannot be a zero growth stock